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Carothers Company assembled the following information in completing its March bank reconciliation: balance per bank $7,640; outstanding checks $1,550; deposits in transit $2,500; NSF check $160; bank service charge $50; cash balance per books $8,800. As a result of this reconciliation, Carothers will ________.

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Answer:

The answer is: Adjust cash account by reducing $210 from it.

Explanation:

We must adjust the cash balance per books. We can do this by staring with the cash balance and subtracting bank service charges and NSF checks:

  • $8,800 - ($50 + $160) = $8,800 - $210 = $8,590

We can check that our answer is correct by reconciling the bank account. We must start with the bank's balance, add deposits in transit and subtract checks outstanding:

  • $7,640 + $2,500 - $1,550 = $8,590

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